Lawrence’s chamber of commerce confident in future of minority loan program, now known as Diversify Douglas County
photo by: Lawrence chamber/EDC
A new program designed to provide thousands of dollars in start-up or expansion funding to minority business owners in Douglas County has drawn some skepticism from Douglas County commissioners.
But inside the Lawrence chamber of commerce, the fledgling program is producing a different type of emotion — passion.
“This has been my passion since I started at the Chamber, and bringing that to fruition has been a priority of the Chamber since before I started here,” said Joshua Falleaf, director of economic development for The Chamber.
Douglas County commissioners during 2024 budget proceedings last month approved $105,000 in county funding for the new revolving loan program, but they did so with a major condition. Commissioners informed Falleaf and other Chamber leaders that they wanted to examine the program more thoroughly, and that the funding will be released in the form of a match to dollars secured by the Chamber from private sources.
Recently, The Chamber president and CEO Bonnie Lowe told the Journal-World that she was confident that The Chamber was not only going to meet the $105,000 matching requirement, but would exceed it. Lowe said the project was too important to go unfunded.
“(Securing) capital is one of the biggest challenges for new businesses and entrepreneurs,” Lowe said. “The minority community faces these challenges more than some, and we would like to be of assistance to the minority population.”
Thus far, though, the program — which recently has been branded Diversify Douglas County — hasn’t provided any funding — which will come in the form of low-cost loans — to businesses. The Chamber program essentially is facing the same challenges as a start-up — it has been gathering funding so that it has the money to make loans to qualifying businesses.
It has had success, though, in gathering funding, especially at Lawrence City Hall. City commissioners approved $105,000 in both their 2023 and 2024 budgets, but the 2023 funds only recently were disbursed to the Chamber and its related Economic Development Corporation of Lawrence and Douglas County.
With that recent disbursement from the city, the DDC program is close to actually making loans, Lowe said.
“We have funds to get started and show the good work that the (program) will do in the county,” Lowe said.
The maximum loan amount for DDC will start out at $15,000, Lowe said, but that could change in the future based on community needs. Falleaf said the loans were considered low-interest with a rate of 4%, which he said is “about less than half the typical commercial loan right now.” He also said the rate would apply to all loans, regardless of the amount. DDC will only provide funding in the form of loans, not grants, Lowe said.
Chamber leaders also are pointing to a nearby program to help area residents understand what is possible with such a revolving loan program.
DDC is patterned after Wyandotte County’s Empower WYCO, one of five minority entrepreneurial programs in the state backed by NetWork Kansas, which is a nonprofit entity focused on developing an entrepreneurial ecosystem in the state. According to a press release from the Wyandotte Economic Council, 20 minority-owned businesses have received the program’s maximum loan amount of $15,000 since its inception in March 2022.
Douglas County, though, has faced some challenges that Wyandotte County hasn’t. Douglas County has fewer business support organizations in place that can serve as advisers and mentors to businesses seeking loans.
“When looking at Empower WYCO’s structure, there were a lot of entrepreneurial support organizations available to partner with,” Falleaf said. “But looking around Lawrence, (the KU Small Business Development Center) was the only one that kind of honed in and focused on entrepreneurial support.”
Falleaf said the SBDC — which shares space in the same building as The Chamber at 718 New Hampshire St. — will be integral to what Diversify Douglas County wants to accomplish. SBDC offers free and confidential advising for small business owners. And that could prove valuable for DDC applicants that are required to appear before a financial review committee as part of the DDC loan-approval process.
But Falleaf is hopeful that other support organizations also will emerge in Douglas County for businesses owned and operated by residents who identify as Black, Indigenous or People of Color (BIPOC). He said networking events with the BIPOC community have shown an overall lack of locally available resources that focus on the needs of minority entrepreneurs.
“The biggest needs are not only just access to capital, but managing that capital in a way that best serves their business,” he said. “Whether it’s the SBDC or some of our partners at the Chamber and throughout the community, there is expertise out there that we need to do a better job of connecting with.”
Falleaf said that wrap-around support is in the works, and it could include weekly workshops “that create mentorships through additional networking events.”
photo by: Lawrence chamber/EDC
Falleaf said another entity that could provide needed support is currently getting started in Lawrence — a group called Black:30 that fits the SBDC mold and is currently building its capacity. The group has had some events locally but is building for a more robust launch in early 2024, Falleaf said.
“They would fulfill a real need here locally,” Falleaf said, adding that the organization’s founders have real-world business-related expertise. “They are local, went to school here, and have a really strong network. We’re really excited to be able to partner with them on setting up events and providing opportunities for people to connect with entrepreneurial resources.”
According to its website, the organization hosted a “Black and Bankable” event on KU’s Innovation Campus earlier this month, and in August it hosted a “Black Business Market” event that showcased businesses owned by Black residents in Douglas County.
As part of the DDC loan process, Falleaf has assembled a “diverse BIPOC financial review board” that has the final say on approval of loans. Falleaf confirmed the DDC recently received its first loan application, but no applications have reached the approval phase yet.
“The board reviews applications, interviews the applicant, and ultimately (decides on) approval of applications for funding,” Falleaf said, adding that he is tasked with convening the five-person panel. “I thought it was important that this financial review board reflect the diversity of the would-be applicants and is representative of the entrepreneurial community. We have men and women, Hispanic, Black, and Jewish representation — with a lot of expertise in various areas.”
With the review panel in place, DDC has begun networking with other Empower loan programs that are run through the NetWork Kansas organization.
“We have data that it is working and effective in other communities,” he said. “So Diversify Douglas County should be as effective in our community.”
Falleaf said he has learned about $1 million in loans have been made through the other Empower programs in the state, with each loan being made in a maximum of $15,000 increments.
“There is a greater story to tell, and we will continue to try to find the best way to tell it,” Falleaf said.
Douglas County commissioners are going to want to hear that story.
County commissioners recently said they want the Chamber and other economic development partners to provide metrics showing outcomes for the funding they are receiving from the county.
Commissioner Shannon Reid in particular has had multiple questions and concerns about the program.
“In terms of how (the program) will function locally, I think there are a lot of unknowns,” Reid said recently.
Reid said she wanted more information about benchmarks for the program as it gets off the ground. Falleaf told the Journal-World those benchmarks still need to be developed. Reid expressed concern about how many applicants the program expects to receive, and questioned whether the $15,000 loan maximum would be too small to serve businesses.
Reid also told her fellow county commissioners that the $105,000 funding request seems arbitrary “without knowing a year from now if there will be some loans in service, and money is coming and going from that fund.”
“Because there’s money in the pot to start giving people loans, I would just feel more comfortable knowing that it’s working, and how it’s working,” Reid said.
While the county has set aside the $105,000 in its 2024 budget for the program, the commission will still have to take a formal action before the money is actually provided to The Chamber. Reid said it will be important to hear more information at that time.
“I’m hopeful, but I’m also a skeptic,” Reid said, “and that’s what I’m weighing out.”